There’s more evidence that renters are just as likely to be struggling as homeowners.
A typical renter in Miami would need to spend nearly 50% of his or her income to rent a one-bedroom apartment, but a typical millennial renter would need to spend 54% of his or her income in that city, according to a new analysis of rental listings by real estate site Trulia. In Los Angeles, millennials pay nearly 39% of their monthly rent versus 34% for the average renter. In New York, they pay as much as the average renter (34%) and pay slightly less than the average renter in San Francisco (33.5% versus for the average renter 37%).
The solution is simple, though maybe not ideal for everyone: In America’s biggest rental markets, a renter can save on average 13% of his or her income by getting a roommate. While splitting an apartment with a roommate will save money, the benefits of sharing a living space vary from city to city, home to home. In Miami, millennials save 19% of their income in a two-bedroom apartment and they can save 14% in Los Angeles and New York, but only 9.5% in Washington, D.C. In all cases, except Miami, they can pay less than 30% of their income on rent by having a roomie.
Even in markets with the lowest amount of potential savings, it’s still worth considering having a roommate, Trulia found. In Minneapolis, which has the lowest potential savings, a renter could save the equivalent of 5.3% of median household income or $310 per month; in St. Louis, the renter could save 5.7% or $260 per month; in Dallas 6% or $310 per month; and 6.6% or $400 per month in Baltimore.
Once upon a time, 30% of your income was the maximum you were supposed to spend on rent, but these days the median amount renters spend across the country is almost 40%. As MarketWatch reported last month, many renters of all ages spend north of 30%. On average, renters in the Marin County/San Francisco metro area will spend over 77% of their salary to pay rent in 2017, according to a study by Attom Data Solutions, the parent company of real-estate website RealtyTrac.
More than 20% of millennials lived with a roommate as of 2015, Trulia said, but many others are holding off on rent and still living at home with their parents. “Young people today are increasingly living with a roommate — whether it’s their parents, siblings, other relatives or friends,” said Ralph McLaughlin, chief economist at Trulia. “Many are saddled with college debt and struggling to find good paying jobs that will enable them to form their own households. Until they do, many will continue to rely on roommates to save on housing costs.”
Rental costs are on the rise, partially due to a lack of available properties to buy or rent. Americans spent $478.5 billion on rent in 2016, a 3.8% increase from 2015, according to real estate site Zillow. Renting has its benefits and can be an attractive option for older people wanting to sell their homes and downsize or those looking for a flexible lifestyle, where they can more easily pick up and move.
See also: Should I rent or buy a house?
Buying a home might seem like a deal and, in some cases, may be cheaper than renting. Naturally, there are additional expenses that come with home ownership, though, such as closing costs and maintenance, and even home buyers are looking for ways to share costs: More unmarried young couples are buying homes together now than they were a decade ago, not only because lifestyle choices among millennials have changed in recent years (they’re pushing off marriage and families longer than their elders did), but because it’s easier to split the bills.
This article originally appeared on Marketwatch.
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